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Fiscal package until 2027, tax return for small businesses

2024-09-21 09:15:00, Ekonomi CNA

Fiscal package until 2027, tax return for small businesses

Illustrative photo, taken from Google

The government issued for consultation the draft for the 2024-2027 Medium-Term Revenue Strategy, according to which a scheme will be drawn up to tax small businesses with tax on profits that are currently exempt from this tax.

"Revision of the taxation scheme of businesses with low incomes, applying simple schemes of taxation on net profit through a certain level of expenses assumed as a percentage of gross income" is stated in the government document.

The government's strategy argues that this change is due to the fact that systems containing several tax rates create spaces for avoidance and the tendency of taxpayers to benefit from tax regimes with lower rates is known.

The structure of economic operators in Albania is such that the vast majority of taxpayers belong to groups with very low or low incomes:

The total number of registered businesses (that have completed TF or TFTH during 2023) is 141,300, of which:

1. Taxpayers with income 0-5 million 105,293 or 74.5% of the total;

2. Taxpayers with an income of 5-8 million 13,281 or 9.4% of the total;

3. Taxpayers with an income of 8-14 million 8,010 or 5.7% of the total;

4. Taxpayers with income over 14 million 14,716 or 10.4% of the total;

The data show that 89.6% of the total businesses operating in Albania declare an income of up to 14 million lek for the year 2023.

Based on the above panorama, the analysis and taking measures in the future for the improvement of this business income taxation scheme brings:

-Restriction of differential treatment within the general regime of direct taxes;

-Preventing the creation of spaces for abuses with the declaration;

-Providing neutrality from the point of view of the tax burden for all forms of business;

-Reducing compliance costs for small taxpayers;

- The reduction of costs of administration and control of declarations of small taxpayers by the tax administration is argued by the government.

The steps that have been taken and will be taken are focused on:

The change in the tax system related to income taxes foresees anti-avoidance measures in order to prevent businesses from designing tax schemes for unfair use of the zero tax rate, or its reduced rates.

According to the government's project, it is more appropriate for small businesses to design a simple tax system on income and assumed expenses, using an acceptable tax rate for them and at the same time allowing them other deductions, which further reduce the effective tax rate./ Monitor.al